Carnival To Push In Europe

Carnival Corp. sees its best prospects for growth in Europe through expansion of its Costa Cruises brand, senior managers told shareholders at the annual meeting on Tuesday.

Vice Chairman Howard Frank said the population of six principal European countries exceeds the United States and their $6.1 trillion gross national product is nearly as high, but only 2.1 million Europeans took a cruise last year, compared with 6.9 million North Americans.

Costa, which has seven ships, is recognized by 71 percent of Italians and is also a strong brand in France and Spain. If Carnival and other cruise firms can persuade just another 1 percent of the European population to cruise, it would add 4 million new cruise passengers, Frank said.

Carnival's emphasis on Europe comes as the U.S. economy slows, hurting bookings. In a filing Monday with the U.S. Securities and Exchange Commission, Carnival said bookings have continued to be soft since Carnival released its first quarter results March 21.

Miami-based Carnival bought full ownership of Costa last year for $510 million. It is building three new ships for delivery after 2003. To add capacity in the meantime, it is transferring Carnival's Tropicale and Holland America's Westerdam to Costa's fleet, beginning with Tropicale in June.

Frank compared Carnival's position in Europe to where it stood 15 years ago in the North American market. Today it holds 17 percent of the European market. It carried 15 percent of North American passengers in 1985 but that total has since grown to 39 percent.

Frank said Carnival Cruise Lines will eventually sail a ship in Europe mainly for North American customers but said no announcement is imminent.

In Asia, company chairman Micky Arison said Carnival is willing to cede leadership for the moment to Star Cruises of Malaysia, noting that the Asian market is especially oriented to casino gambling. "The reality is the principal business of Star Cruises is gaming, not cruising," Arison said.

Frank said Carnival is feeling the spending slowdown in the U.S. economy, but said its 28 percent net profit margins make it the best positioned cruise line in a period of weak demand.

Carnival general counsel Arnaldo Perez confirmed that Carnival Cruise Lines has formally settled a lawsuit that charged it did not abide by the Americans with Disabilities Act. He said the final agreement is subject to a court fairness hearing. Other Carnival Corp. subsidiaries have been sued on similar grounds.

"All of our brands are conscious of the issue. Obviously we haven't made people 100 percent happy," Arison said.

Tom Stieghorst can be reached at tstieghorst@sun-sentinel.com or at 954-356-4658.